WASHINGTON (Reuters Breakingviews) – The classic ransom is a suitcase full of unmarked US dollar bills. Bitcoin’s role in the colonial pipeline hack shows that the global crime currency has a rival. It’s sort of a sign of bitcoin’s success, but it also sets the stage for regulators to step up their interventions.
Colonial’s predicament highlights the ease of use of Bitcoin. A week ago, the fuel transportation company paid a ransom of nearly $ 5 million in digital currency to regain access to its computer systems, Bloomberg reported Thursday. In 2017, one of the biggest ransomware attacks called WannaCry demanded payment in bitcoin from more than 200,000 victims. A year later, more than half of those breaches required bitcoin, according to cybersecurity firm PurpleSec.
This reflects the rapid acceptance of the 12 year old cryptocurrency. The market value of all bitcoin in circulation, totaling nearly $ 19 million, topped $ 1 trillion for the first time in February. It is now trading at around $ 50,360, according to digital exchange bureau Coinbase.
It has also become more common in daily transactions. Last year, National Football League player Russell Okung became the first in the sport to have at least part of his salary paid in bitcoin. More and more home sellers are accepting cryptocurrency, especially in countries that have weak fiat currencies like Argentina.
But anonymity is a legitimate concern of regulators. The asset itself is unregulated, so no personal information is needed to transfer or convert cryptocurrencies, although watchdogs are increasingly scrutinizing digital exchanges and associated payment services. Banks that facilitate transactions in US dollars must adhere to so-called “know your customer” rules which require the recording of certain data on the parties involved.
Because cryptocurrencies are not bound by such measures, they are used in nefarious schemes, terrorist financing, and other illicit activities. This has led to an increase in federal investigations. For example, the Binance crypto exchange is under investigation by the US Department of Justice and the Internal Revenue Service for possible money laundering, according to Bloomberg.
The new US Securities and Exchange Commission, Gary Gensler, also announced more regulations regarding crypto business. Being the benchmark for ransom demands shows bitcoin has gone from the margin to the conventional, but also gives Gensler and other watchdogs a reason to step up the pace.
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NEWS FROM THE CONTEXT
– Colonial Pipeline paid hackers nearly $ 5 million in bitcoin on May 7 to restore disabled computer networks, Bloomberg reported on May 13. After receiving the payment, the hackers provided a decryption tool to allow access to its systems. The cyberattack led Colonial, one of the largest fuel transport operations in the United States, to shut down pipelines, causing some residents of the Southeastern United States to queue at gas stations due to fears of shortage.
– The FBI attributed the breach to DarkSide, a ransomware group reportedly operating out of Russia or Eastern Europe.
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